Building business strategy of the Petrovietnam oil corporation - one member company limited (PVOIL) phase in 2013 to 2018 and vision to 2025

Group PV OIL’s business strategy Global Advance Master Of Business Administration CAPSTONE PROJECT REPORT BUILDING BUSINESS STRATEGY OF THE PETROVIETNAM OIL CORPORATION – ONE MEMBER COMPANY LIMITED (PVOIL) PHASE IN 2013 TO 2018 AND VISION TO 2025 Class: GaMBA01.C0111 Group Number: 02 NGUYEN QUANG THANH HUYNH LUONG QUANG PHAM QUANG HUY NGUYEN TUAN ANH HO CHI MINH 2013 Page i Group PV OIL’s business strategy THANK YOU  To complete the graduation thesis as the current results, Group members sincerely thank and best wishes to you Lecturer, Assistant Professor and collective staff of Griggs University and Training jobs systemsTechnology Center ETC Hanoi National University in general and Dr Hoang Lan Tinh has created favorable conditions for us access to the knowledge of modern business strategy At the same time, have been supporting us to complete the entire Global Advanced Master of Business Administration program MBA is organized by the center Sincere thanks and best wishes to the Viet Nam oil corporation and he / she is the expert in the oil and gas industry support, make advantages, has interested and commented as well as provide data for the group to complete this graduation thesis In addition, Group also would like to thank those responsible for affiliate program of the ETC Centre in Ho Chi Minh City (Gasa), classmates member Gamba C0111 has interested, encouraged, commented to group to complete graduation report Page ii Group PV OIL’s business strategy INDEX PREAMBLE 1 The necessity of the subject Research objectives The object and scope of the study 3.1 The object of the study 3.2 The scope of the Study Research Methodology 4.1 Expert methods 4.2 Desk research methods Structure of topics CHAPTER THE BASIS OF THE STRATEGIC THEORY MAMAGEMENT 1.1 THE CONCEPT OF STRATEGY AND STRATEGIC MANAGEMENT 1.1.1 The concept of strategy 1.1.2 The concept of strategic management 1.1.3 The benefits of Strategic management: 1.2 THE TYPE OF STRTEGIES 1.2.1 Company-level strategy 1.2.2 Business-level strategy (SBU) 1.2.3 Functional-level strategy 1.3 FACTORS AFFECTING STRATEGY FORMULATION 1.3.1 Assessment of outside factors of the organization (according to section 1.2 of Appendix attached) 1.3.2 Assessment within situation the organization 1.3.3 Determined strengths and weaknesses 1.3.3.1 Strengths and weaknesses of the service quality 1.3.3.2 Strengths and weaknesses of financial 1.3.3.3 Sustainable competitive advantage 1.4 STRATEGY FORMULATION PHASE AND TOOL Page iii Group PV OIL’s business strategy 1.4.1 EFE matrix_ External Factor Evaluation matrix 1.4.2 IFE matrix_ Internal Evaluation matrix 10 1.4.3 Competitive Photo matrix (CPM) 10 1.4.4 SWOT Matrix 11 1.4.5 QSPM Matrix 12 1.5 STRATEGIES, POLICIES OF TRADING 13 1.5.1 Determined the current mission, objectives and strategy 13 1.5.2 Long-term and annual goals of the company 13 1.5.3 Strategy of the SBU 13 1.5.4 The function strategies 14 1.5.4.1 Marketing strategy 14 1.5.4.2 Research and development strategy 14 1.5.4.3 Materials management and purchase strategy 14 1.5.4.4 Operational, production strategy 14 1.5.4.5 Financial Strategy 14 1.5.4.6 HR Strategy 15 1.6 SUMMARY CHAPTER 15 CHAPTER 2: ANALYZING SITUATION OF BUSINESS STRATEGY AND BUSINESS ENVIRONMENT OF THE PETROVIETNAM OIL CORPORATION 16 2.1 PETROLEUM MARKET SITUATION 16 2.1.1 The role of the petroleum industry and regulation petroleum in economy 16 2.1.1.1 The global oil market and development trends 16 2.1.1.2 The products characteristics and distribution of petroleum 17 2.1.2 Government regulation of petroleum markets 18 2.1.2.1 The organization 18 2.1.2.2 Production and distribution 19 2.1.2.3 Price 19 2.1.3 Petroleum demand of Viet Nam 20 2.1.4 Petroleum distribution system of Viet Nam 20 Page iv Group PV OIL’s business strategy 2.1.4.1 Petroleum supply 20 2.1.4.2 Market segmentation of the petroleum focal point business 21 2.1.4.3 Petroleum stored system of the petroleum focal point business 21 2.1.5 International petroleum market 22 2.1.6 Petroleum market forecast in Viet Nam 2013 - 2018 23 2.2 OVERVIEW OF PETROVIETNAM OIL CORPORATION 23 2.2.1 Introduction 23 2.2.1.1 General Information 23 2.2.1.2 Activities of production and business 24 2.2.1.3 Ownership structure 24 2.2.1.4 The organizational structure 24 2.2.1.5 Mission, vision and goals of PV OIL 24 2.2.1.6 Management model (in Section 2.7, Appendix attached): 25 2.2.2 PV OIL storage 25 2.2.3 PV OIL’s retail network 26 2.2.4 Petroleum supply chain management/ business policy of PV OIL 26 2.2.4.1 Organizational and management model of petroleum distribution system 26 2.2.4.2 Petroleum systems of PV OIL’s business organizations (Section 2.10, Appendix attached) 26 2.2.5 Source policies 26 2.2.6 Price policy 27 2.2.7 Financial investment situation 27 2.2.8 Result of business activities in 2008 so far 27 2.3 ANALYSIS OF FACTORS INFLUENCING PV OIL BUSINESS OPERATION 28 2.3.1 Macro environment analysis 28 2.3.1.1 Economic factors: 28 2.3.1.2 Factors of policy from the government, law and pilitic: 29 2.3.1.3 Technology factors 30 2.3.1.4 Nature factors 30 Page v Group PV OIL’s business strategy 2.3.2 Analysis of oil and petrol micro-environment 31 2.3.2.1 Infrustrucure of oil and petrol retailing system of Vietnam 31 2.3.2.2 Competitor in the sector 32 2.3.2.3 Potential competitors 33 2.3.2.4 Developing and improving product and replacement product 33 2.3.3 Analysis of internal background 34 2.3.3.1 Human resource 34 2.3.3.2 Research and development 35 2.3.3.3 Production and manufacture 36 2.3.3.4 Investment 36 2.3.3.5 Accounting Finance 37 2.3.4 Identify the strengths, weaknesses, opportunities and threats to PV OIL 40 2.3.4.1 Strengths 40 2.3.4.2 Weakness 41 2.4 ANALYSIS OF MATRIXES TO SELECT BUSINESS STRATEGY OF PV OIL 41 2.4.1 Analysis of competitive advantage and build the potential success, the success of the PV potential network OIL 41 2.4.1.1 Competitive matrix image 41 2.4.1.2 Build up successful potential and successful potential network for PV OIL 42 2.4.2 Connecting internal and external factors to set up possible strategies 43 2.4.2.1 Matrix values external factors (EFE) and internal factors (IEF) 43 2.4.2.2 Total important mark in matrix IFE and EFE 45 2.4.3 Analyze matrix SWOT 46 2.4.3.1 Quantitative analysis on macro, micro-environment and internal situations 46 2.4.3.2 Analyze matrix SWOT 49 2.4.4 Matrix analysis QSPM 52 Page vi Group PV OIL’s business strategy 2.4.4.1 QSPM`s quantitative Analysis Matrix for the group S.O 52 2.5.4.2 Commented the group SO, WO, ST, WT of QSPM matrix 58 2.5.5 SPACE matrix analysis-strategic location-activities evaluation 60 2.5.5.1 Analysis of value inside and outside the PV OIL 60 2.5.5.2 SPACE matrix analysis 62 2.5.6 Strategic Options for PV OIL 62 2.5.7 The options of SBU level strategy 63 2.5.7.1 How competition in the petroleum industry 63 2.5.7.2 Value chain analysis and identification 64 2.5.7.3 Market segments and value chain of goods: 67 2.5.7.4 Selection of the value chain and target market of PV OIL 70 2.5.7.5 The SBU level strategy 71 2.6 SUMMARY OF CHAPER 71 CHAPTER BUSINESS STRATEGIC PLANING FOR THE PETROVIET NAM OIL CORPORATION IS A PERIOD 2013-2018 AND VISION TO 2025 72 3.1 BUSINESS STRATEGY OF PV OIL IN PERIOD 2013-2018 AND VISION TO 2025 72 3.1.1 Review the mission, vision and goals of PV OIL 72 3.1.2 Annual and long-term goals of PV OIL 73 3.1.2.1 Specific objectives of PV OIL 73 3.1.2.2 The objective functional units of the company 74 3.1.3 Strategic Options for PV OIL 75 3.1.4 The functional strategies of PV OIL 75 3.1.4.1 Marketing 75 3.1.4.2 Financial 76 3.1.4.3 Human resoure 77 3.1.4.4 Operation and production 79 3.1.4.5 Research and development product 80 3.1.4.6 Strategic import and export of crude oil and petroleum management 80 3.1.4.7 Combining the strategic function of the PV OIL 80 Page vii Group PV OIL’s business strategy 3.1.5 The relationship between the functional strategies to increase business efficiency 81 3.2 PERFORMANCE SOLUTIONS 82 3.2.1 Developing market 82 3.2.2 Product differentiation with other petroleum enterprises 82 3.2.2.1 Creating value for customers 83 3.2.2.2 Provide value for customers 83 3.2.2.3 Product difficult to imitate 83 3.2.3 Improving risk management 84 3.2.3.1 Risks of the project (fail investment projects) 84 3.2.3.2 Risks from customers (customers leave, or not payment order) 84 3.2.3.3 Transition risks (large changes in technology or direction of strategy) 85 3.2.3.4 Risks from competitors (appears competitors can not be beat) 85 3.2.3.5 Risk of brand (brand decrease value in customer) 86 3.2.3.6 Sector risk (business to become the non-profit) 86 3.2.3.7 Risk of delayed (businessnot growth or even decline) 87 3.2.4 Venture and cooperation 87 3.3 RECOMMENDATIONS 88 3.3.1 For state and Government 88 3.3.2 For Petroleum Vietnam Oil Corporation and owned Vietnam National Oil and Gas Group 90 3.3.2.1 Short term recommendations 90 3.3.2.2 Long-term recommendations 92 3.4 SUMMARY OF CHAPTER 94 GENERAL CONCLUSION 95 REFERENCES 96 APPENDICES ATTACHED 97 Page viii Group PV OIL’s business strategy PREAMBLE The necessity of the subject Energy with its essential importance has strong influence on economic policy, politics of every country in the world, including oil energy sources play a very important role and account for nearly absolute in the structure of energy sources used by humanity today So, the oil energy security is the country seen as a pressing need in the life and daily activities of the people Our country's economy is moving according to the market mechanism with the management of the state, gradual integration into the regional and world The building business strategies for each business, oriented sustainable development in the market mechanism is an essential Business strategies to help managers and all employees in the enterprise aware of the purpose and direction of their business hrough which all members of the business will know what to do, and encourage them to strive to achieve the short-term performance while improving better longterm interests of the business It helps the administrator to quickly grasp business, take advantage of opportunities and to limit the risks due to environmental changes brought Derived from petroleum fuel needs of the country, its importance in the socio-economic development of the country, as well as oil and gas business strategy of companies in Vietnam, Group boldly chose the subject "Building business strategy of PetroVietnam Oil Corportaion - One Member Company Limited (PV OIL) phase in 2013 to 2018 and vision to 2025"as a graduation thesis Research objectives - Develop business strategies of PetroVietnam Oil Corporation based on the overall objectives of the enterprise is: "To develop and complete downstream stages in the Oil & Gas industry and strive to become the Corporation leading in Vietnam, on a par with oil and gas companies in the region and the world " - Analysis of demand for gasoline, the capacity in the country and abroad, the response capacity of the existing oil companies, analysis development capabilities of the distribution system through strategies - Proposed strategy to build oil business systems to develop corporations in a sustainable way in the period 2013-2017 and vision to 2025 - Implementation of the policy, the policy of the state of the business system, towards markets in the region and the world, proposals to the government on policies to ensure implementation of development strategy petroleum Vietnamese brand in general, the oil and gas business strategy of Vietnam in particular, to create a favorable business environment and future development Page Group PV OIL’s business strategy The object and scope of the study 3.1 The object of the study - Research on business activities in the petroleum sector of the Vietnam Oil Corporation, from which made the business strategy of the PetroVietnam Oil Corporation, in order to increase competitiveness, increased market share, reduced intermediaries, reduce production costs in the petroleum industry in Vietnam - For the export - import oil raw of PV OIL is an individual work of PetroVietnam and the Vietnamese Government tasked PV OIL done this work without profit, so the raw oil export-import will not be subject research in the graduation thesis of our group 02 3.2 The scope of the Study Investment due to the oil systems business development of the PetroVietnam Oil Corporation over the years and from the predecessor company, with many different systems and policies, it is difficult for research results for consistency, to ensure the effectiveness and practicality of the subject so the author limited research data collection from 2008 until now (anniversary of the PetroVietnam Oil Corporation) Scope of research through secondary information sources are sources of business statistics PV OIL, the Vietnam National Oil and Gas Group, the Ministry of Industry and Trade, the primary source of information on demand for petroleum fuels domestic and region, through consultation with industry experts to classify the importance of the elements in the matrix classify level of the business response to the elements, so that the subject will study the oil and gas business in the future through strategic Research Methodology The study is based on the business strategy management documentation, gasoline demand forecasting documents of the Ministry of Trade and Industry that the author has collected, as well as speeches, interviews, gather opinions of managers and experts of the PV OIL and experts are active staff in the field of oil and gas business in the company of Vietnam In addition, the research information and data to be gathered and analyzed based on reporting of PV OIL In order to study the problem for results in a precise and effective when applied in practice, the team used the following research methods:: 4.1 Expert methods Consult experts in the petroleum industry, petrochemical industry, fuel storage construction industry in Vietnam Page Group PV OIL’s business strategy Table 2.8a Storage system of PV OIL No Name Place Power (m3) Total I I.1 I.2 I.3 732,884 Terminal depots Property 658,400 Northern 75,500 Dinh Vu Warehouse Dinh Vu industrial zone, Hai Phong North Central 75,500 PV OIL 67,000 Vũng Áng Warehouse Ky Anh, Ha Tinh Chân Mây Warehouse Phu Loc, Thua thienHue NTB and TN coastal 60,000 PV OIL Vung Ang 7,000 PV OIL 22,000 Lien Chieu Warehouse Đa Nang 7,000 PV OIL Central Vung Ro Warehouse Phu Yen 15,000 PV OIL Phu Yen I.4 I.5 Southeast 371,500 Vung tau Warehouse Thang Nhat Vung Tau Ward, 121,500 PV OIL Cu Lao Tao Warehouse Thang Nhat Ward , Vung Tau 150,000 PV OIL Nha Be Warehouse Nha Be, HCMC 100,000 PV OIL South West 122,400 Tra Noc /Can Warehouse Can Tho Warehouse II Entrepot 42,984 II.1 Northern 11,000 Tho Tra Noc industrial zone, Can Tho MeKong Cai Rang, Can Tho 50,400 PV OIL 72,000 PV OIL Mekong Cai Lan Warehouse Ha Long, Quang Ninh 5,000 Da Phuc Warehouse Pho Yen, Thai Nguyen 500 PV OIL Cai Lan PV OIL Thai Nguyen Page 109 Group PV OIL’s business strategy Nam Dinh Warehouse Vu Ban, Nam Đinh 3,000 PV OIL Nam Đinh Thai Binh Warehouse Vu Thu, Thai Binh 6,000 PV OIL Thai Binh Ninh Binh Warehouse Ninh Phuc industrial zone, Ninh Binh 1,500 PV OIL Ninh Binh II.2 North Central II.3 NTB and TN coastal II.4 Southeast 12,480 Tay Ninh Warehouse Hoa Thanh, Tay Ninh 8,000 PV OIL Tay Ninh Bien Hoa Warehouse Bien Hoa, Đong Nai 4,480 II.5 South West PV OIL Eastern 19,504 Soc Trang Warehouse Soc Trang Vinh Long Warehouse Ward, Vinh Long City 2,400 PV OIL Vinh Long Long Ho Warehouse Long Ho, Vinh Long 1,500 PV OIL Mekong An Giang Warehouse Long Giang An 4,650 PV OIL Mekong Kien Giang Warehouse Chau Thanh, Giang Kien 2,400 PV OIL Mekong Bac Lieu Warehouse Ward, Bac Lieu town 1,600 PV OIL Mekong Ba Tri Warehouse Ba Tri, Ben Tre 800 PV OIL Mekong Long Duc Warehouse Long Đuc, Tra Vinh 1,800 PV OIL Mekong Tra Vinh Warehouse Ward, Tra Vinh town 260 PV OIL Mekong 10 An Minh Warehouse An Minh, Kien Giang 950 PV OIL Mekong Tac Cau Warehouse Chau Thanh, Giang 1,550 PV OIL Mekong 12 To Chau Warehouse To Chau, Kien Giang 650 PV OIL Mekong III Production Warehouse 31,500 CB Condensate factory Tan Thanh, Ba Ria Warehouse Vung Tau 31,500 11 944 Xuyen, Kien PV OIL Mekong PV OIL Phu My Page 110 Group PV OIL’s business strategy Comparison rate of capacity of depot hub and transit depot of PV OIL in every area with the country's depot capacity can be seen as follows: Depot Hub: Compared with a market share of PV OIL (about 20%), the capacity of the terminal depot of PV OIL in the North Central region, the South East and South West is surplus, the capacity in the Northern region and especially in the South Central Coast and Central Highlands are lacking, need to add more Transit Depot: Transit depot’s capacity of PV OIL was too low compared to the country North Central and South Central Coast and Central Highlands, with narrow topography, adjacent to the sea, PV OIL can use the Depot Hubs and Sea Transit Depot to provide fuel for the areas For the Northern region, the South East, South West PV OIL needs plans to have more additional transit depots to reduce shipping costs, develop the direct customers, eliminating the advantage of the general agent Total capacity of PV OIL is 27% compared to the country, while the market share of PV OIL took 20% that demonstrated regional structural capacity, storage function are inappropriate, the ability to use storage capacity is not effective Table 2.7b Classification of petroleum storage to 30/6/2010 No Region Total capacit y rate (%) to country First receiving depots rate Entrepo rate (%) (%) to t (level to country 2) country Northern 86.500 11% 75.500 18% 11.000 3% North Central 67.000 42% 67.000 63% - 0% Central coast and Highlands 22.000 3% 22.000 9% - 0% Southeast 383.980 24% 371.500 26% 12.480 12% South west 141.904 34% 122.400 44% 19.504 17% Total 701.384 18% 658.400 27% 42.984 7% Page 111 Group PV OIL’s business strategy 2.8 PV OIL organized distribution system Diagram 2.2.4.1 PV OIL organized distribution system PV OIL Imported petroleum and coordinate sources goods from the Enterprises of Depot Petroleum Management (Head office) Level units (branches) Corporation authorized as a wholesale, manage the entire sales work, allocation unit for grade in the assigned market area Support level units in sales for the general agent, Level units (branches) agent (delivery, tracking payments, debts), work with provincial governments, tax charges as prescribed Member companies Have own Capital, property, have the entrepot (depots) (100% Capital) Act as general agents, direct purchase from the Corporation Stock companies ( 50% of charter capital), consisting of five companies: + Hanoi Petroleum Corporation (PV Oil Hanoi) + Central Petroleum Corporation (PV Oil Central) + Saigon Petroleum Corporation (PV Oil Saigon) + Vung Tau Petroleum Corporation (PV Oil Vung Tau) + Mekong Petroleum Corporation (PV OIL Mekong) These companies act as one general agent (wholesaler) of PV OIL, business relations with PV OIL economic contracts.PV OIL suppliers directly to this unit through the general agency contract under the general sales policy These units are for purchase in local prices of PV OIL for units (unit 1), to be eligible for the credit policy (debt limit), support services (pagesigns, pump head, transportation assistance, etc.) to sell, - These companies hold transit system Subsidiaries of 2, (PV OIL holding> 50% of charter capital), consisting of 21 companies: + Haiphong Petroleum Corporation (PV OIL Haiphong) + Tayninh Petroleum Corporation (PV OIL Tayninh) + Namdinh Petroleum Corporation (PV OIL Namdinh) + Thaibinh Petroleum Corporation (PV OIL Thaibinh) + Joint Stock Company for Investment and Development of oil and gas services (PISD) + Petroleum stock company Petrovietnam Vinashin (PVOil Shinco.JSC) + Petroleum Transport Joint Stock Company Oil (PV Oil Trans) + Corporation Oil and Gas Production and Processing of Phu My (PV Oil Phu My) + Thainguyen Petroleum Corporation (PV OIL Thainguyen) Page 114 Group PV OIL’s business strategy + Ninh Binh Petroleum Corporation (PV OIL Ninh binh) + Thanh Hoa Petroleum Corporation (PV OIL Thanh hoa) + Vung Ang Petroleum Corporation (PV OIL Vung Ang) + Vinh Long Petroleum Corporation (PV OIL Vinh Long) + Binh Thuan Petroleum Corporation (PV OIL Binh Thuan) + Vidamo Corporation + Bac Lieu Corporation (PV OIL Bac Lieu) + Tra Vinh Corporation (PV OIL Tra Vinh) + Phu Yen Corporation (PV OIL Phu Yen) + Cai Lan Corporation (PV OIL Cai Lan) + Bac Giang Corporation (PV OIL Bac Giang) These companies act as one general agent (wholesaler) of PV OIL, business relations with PV OIL economic contracts.PV OIL suppliers directly to this unit through the general agency contract under the general sales policy These units are for purchase in local prices of PV OIL for units (units 2,3), to be eligible for the credit policy (debt limit), support services(equipped with signs, pump head, transportation assistance, etc.) to sales The associated companies (PV OIL holds less than 50% VDL): consisting of 08 petroleum company business: + Quang Tri Corporation + Comeco Corporation + Timexco Corporation + Thuan An Corporation + Ca Mau Corporation + Ha Giang Corporation + PISD Corporation + Binh Thuan Corporation These units operate as one general agent (wholesaler) of PV OIL, business relations with PV OIL by economic contracts responsible for business development in the area headquarters These companies often hold these entrepot (depots), has a network of stores gasoline, relatively large agent, operating within one province The majority of these units by PV OIL acquisition of shares or contribute capital to establish, implement Page 115 Group PV OIL’s business strategy M & A total petroleum dealers across the country 2.10 Organized distribution of PV OIL Diagram 2.9 Organized distribution system of PV OIL PV OIL Suppliers Các xí nghiệp tổng kho (05 units) Các chi nhánh cấp (03 units) Các công ty TNHH 1TV (05 units) Các chi nhánh cấp (26 units) Các CTCP có vốn góp (21 units) Các CHXD trực thuộc Các Tổng đại lý Các đại lý 2.11 Financial and accounting situation Page 116 Group PV OIL’s business strategy 2.11.1 Balance sheet in 2008, 2009, 2010, 2011: ASSETS code I SHORT-TERM 100 ASSETS I Cash and cash 110 equivalents II Short-term financial 120 investments III The short-term 130 receivables IV Inventory 140 V Other short-term 150 assets B LONG-TERM 200 ASSETS I The long-term 210 receivables II Fixed assets 220 III Long-term financial 250 investments IV Other long-term 260 assets V Commercial 269 advantage 270 TOTAL ASSETS RESOURCES A LIABILITIES I Short-term debt II Long-term debt B Equity I Equity II Funding sources TOTAL RESOURCES 2.11.2 Code 300 310 330 400 410 430 600 Unit: Million VND 2009 2008 2011 2010 30.818.364 28.182.522 12.212.607 20.099.966 5.318.086 5.382.057 2.504.558 2.428.283 90.792 11.824 14.649 6.616 18.140.041 18.611.478 11.684.853 6.733.384 6.487.257 3.551.475 4.796.059 2.445.362 782.189 625.688 1.099.847 598.961 4.368.901 3.618.864 2.365.866 1.274.874 1.101 706 30 2.542.213 1.801.839 1.498.554 673.822 1.122.570 1.048.613 805.146 549.263 539.812 602.711 50.575 40.960 164.307 104.594 10.884 10.799 35.187.266 31.801.386 22.465.832 13.487.481 2011 27.466.900 26.702.917 763.983 6.775.049 6.775.027 22 2010 27.098.779 25.922.442 1.176.337 4.420.661 4.419.263 1.398 2009 19.372.168 19.070.077 302.091 3.051.428 3.013.486 37.942 2008 10.602.257 10.581.314 20.943 2.800.949 2.800.949 39.808 35.187.266 31.801.386 22.465.832 13.487.481 Cash flow table 2008, 2009, 2010, 2011: Page 117 Group PV OIL’s business strategy TARGETS Gross Revenue Code 2011 2010 Unit: Million VND 2009 2008 36.452.791 42.647.074 - - In that amount of subsidies for oil business would - - - 4.591.422 (494.731) 35.958.060 (263.108) 42.383.966 Revenue deductions Net sales 10 75.644.136 87.539.506 Cost of goods sold Gross profit 11 20 73.462.869 85.116.622 (34.498.155) (40.709.648) 2.181.268 2.422.884 1.459.905 1.674.318 Revenue financing activities Financial expenses 21 Of which: expense Cost of sales Interest 24 Enterprise management cost 25 10 Net profit business activities 11 Other income 12 Other costs 13 Profit from 30 14 Income / (loss) from investments in associated companies 15 Profit before tax 31 32 40 45 50 16 The cost of the current corporate income tax 17 Income tax expense Deferred 51 18 Profit after tax 60 52 Allocated to: - Benefits of minority shareholders - Corporation 61 62 272.320 267.900 835.069 578.670 (470.234) (915.261) 520.662 404.671 (119.355) (271.049) 1.152.627 953.176 (784.559) (575.157) 514.473 495.781 (167.960) (132.071) 160.648 613.059 309.471 319.728 158.108 101.134 56.973 96.675 80.554 16.121 41.373 (15.417) 25.957 101.949 (19.333) 82.615 33.253 27.493 (2.765) 242.460 662.433 362.920 399.578 102.876 240.415 56.349 123.426 (9.265) (97.927) 14.657 - 149 519.945 291.914 276.152 123.914 23 222.802 24.838 22 481.549 - - - 123.914 (36.566) (68.810) 15.649 24.934 556.011 360.724 260.503 Page 118 Group PV OIL’s business strategy 2.11.3 Summary of significant accounting policies: Consolidated basis of financial statement: The consolidated financial statements include the financial statements of the parent company - Vietnam National Oil Company and the financial statements of the subsidiary by the parent company to control up to 31/12 each year All major transactions and balances between the parent company and its subsidiaries and between subsidiaries together are eliminated on consolidation financial statements Minority interests in the net assets of the subsidiary is defined as a separate indicator separated from the equity shareholders of the parent company.The losses of minority shareholders suffered their excess capital in the equity of the subsidiary is reduced to the benefit of the parent company when the shareholder has a binding obligation and is ableto offset losses Business combinations: Assets, liabilities and losses on contingencies of a subsidiary are measured at the fair value at the date of acquisition.Any additional amounts between the purchase price and the total fair value of assets acquired recorded as goodwill Investments in associated companies: Associates are companies that PV OIL has significant influence but not a subsidiary or joint venture of the corporation, significant influence is the power to participate in making decisionsthe financial and operating policies of the investee but had no effect on control or joint control over those policies Contribution to joint ventures: Interests in joint venture is an agreement base on a contract by which PV OIL and the parties involved in the implementation of economic activity on the basis of joint control is understood as making the decision to strategically about operating and financial policies of the joint venture must have the consent of the parties to the joint control The joint venture agreement relating to the establishment of an independent business unit, including the parties to the joint venture are the benefits referred to as jointly controlled business establishments PV OIL makes accounting benefits in jointly controlled business establishments by the equity method Goodwills: Goodwills on the consolidated financial statements is the residual between the cost of business combination is compared with the benefits PV OIL in the fair value of the assets, liabilities, and losses on contingencies of the subsidiary, associate, or joint venture unit at the date of investment operations Goodwills is considered an intangible asset, is amortized using the straight-line method for a period of 10 years 2.12 Competitors in the industry Page 119 Group PV OIL’s business strategy No 10 11 12 13 Table 2.13a List of 14 companies to import petrol in Vietnam Types of Company Managing Unit Scope of supply enterprise Vietnam National Ministry of State-owned Petrolium Group Industry & Nationwide enterprise (Petrolimex) Trade Vietnam Petrol Vietnam Oil State-owned National Oil and Nationwide Corporation (PV OIL) enterprise Gas Group Petec Trading & Vietnam State-owned Investment Corporation National Oil and Nationwide enterprise (Petec) Gas Group Vietnam Air Petrol Vietnam State-owned Vietnam Airline Company Limited Airlines enterprise Industry (Vinapco) Corporation One member Ho Chi Minh city Ho Chi Minh and some Saigon Petrol Co., Ltd limited City People’s (SaigonPetro) liability Mekong Delta Committee company provinces People’s Dong Thap Petroleum State-owned Committee of Mekong Delta Trading Company enterprise Dong Thap People’s Thanh Le Import & Joint-stock South-eastern Committee of Export Trade Company company Vietnam Binh Duong General Logistics Military Petroleum State-owned Army and some Department of Corporation enterprise provinces the Vietnam People’s Army Military Petrolchemical State-owned Petroleum Army and some Joint Stock Company enterprise Corporation provinces (Mipec) Vietnam Vietnam Maritime State-owned National Maritime sector Petroleum Company enterprise Shipping Lines Hiep Phuoc Electricity State-owned Vietnam Electricity sector Co.,Ltd enterprise Electricity Petrolimex Aviation Fuel State-owned Petrolimex Aviation JSC enterprise Group Hai Ha Shipping Co., Limited Northern Delta Page 120 Group PV OIL’s business strategy No Types of Managing Unit enterprise liability company Company Ltd Scope of supply Ho Chi Minh city and some 14 Mekong Delta provinces Statistics of the petroleum business enterprises approved by the Ministry of Trade & Industry (up to June 2011) Nam Viet Oil Refinery Joint-stock and Petrochemicals JSC company (Nam Việt Oil) Wholesale and retail market of petroleum products is still dominated by the gas and oil business under State ownership The enterprises import goods from other countries at main ports along the coast: port Haiphong - Quang Ninh in the north, Da Nang port in central – group of ports Nha Be - Cat Lai - Vung Tau in South-East, Can Tho port and warehouse in south-west From the warehouse to receive petroleum products, imported products are transported by waterways and pipelines to other secondary storage points along the coast and inland locations Then the products are distributed by road directly to large consumers and retailers While the majority of the enterprises are free to select retail locations and some main products for trading on some favorable geographical region or some special types to serve the needs of industry (petrol/oil for aviation, petrol for Army), Petrolimex has a duty to maintain a network of retailers across the country, including remote areas With the current organizational model, there are many ministries involve in petroleum import wholesale and retail business Competitive nature of the market increasingly strong, fierce in the oil and gas business is the driving force for development However, every enterprise tries to make their company stronger and have good material facilities system, first of all they focus on building storage system ports for receiving and transit etc This, on the one hand, mobilized a great potential of the business in the development of petroleum ports and depots system, on the other hand, leads to the inadequate exploitation of natural resources (potential oil port areas can be exploited, building oil depots, etc.) lead to a waste because the oil depot/storages aren’t full exploited Table 2.13b Statistics of receiving capacity according to companies No Company Petrolimex Capacity of the host port depots, m3 Ratio % 1.287.200 45,6% PV OIL 827.000 29,3% Petec 156.000 5,5% Page 121 Group PV OIL’s business strategy SaigonPetro 264.000 9,4% Vinapco 23.200 0,8% Petimex 59.000 2,1% Thanh Le Import & Export Trade Company 45.000 1,6% Military Petroleum Corporation 62.900 2,2% Vietnam Maritime Petroleum Company 35.000 1,2% 10 Vietnam Maritime Petroleum Company 40.000 1,4% 11 Hai Ha Shipping Co., Ltd 10.400 0,4% 12 Nam Viet Oil Refinery Petrochemicals JSC (Nam Việt Oil) 12.000 0,4% 2.821.700 100% Total and (Source Ministry of Industry and Trade Up to June 2011) In the companies above, Petrolimex has a complete supply organization all over the country with over 60 affiliates in the provinces; there’re some companies specialized in petroleum transportation by waterway, road etc; pipes system transportation in the North and is the leading enterprise of the State in the fuel supply Petrolimex market share is currently about over 55% PV OIL is now rapidly developing fuel supply system in the whole country with a market share of around 15% Vietnam Air Petrol Company is only allowed to import fuel for aircraft (JetA1, TC-1) Military Petroleum Company, besides the task of supplying for military also involved in supplying fuel for society Wholesale and retail market of petroleum products is still dominated by the gas and oil business under State ownership The enterprises import goods from other countries at main ports along the coast: port Haiphong - Quang Ninh in the north, Da Nang port in central – group of ports Nha Be - Cat Lai - Vung Tau in South-East, Can Tho port and warehouse in south-west From the warehouse to receive petroleum products, imported products are transported by waterways and pipelines to other secondary storage points along the coast and inland locations Then the products are distributed by road directly to large consumers and retailers While the majority of the enterprises are free to select retail locations and some main products for trading on some favorable geographical region or some special types to serve the needs of industry (petrol/oil for aviation, petrol for Army), Petrolimex has a duty to maintain a network of retailers across the country, including remote areas Page 122 Group PV OIL’s business strategy Table 2.13c Petroleum retail market share of the enterprise in Vietnam market from 2008 - 2011 2008 2009 2010 2011 No Company Vol (ton) Petrolimex 7.917 55,2% 8.085 55,0% 8.339 55,2 % 8.428 54,6% PV OIL Petec 2.183 15,2% 1.455 10,2% 2.502 17,0% 1.370 9,3% 2.817 1.223 18,6 % 8,1% 2.943 19,1% 1.255 8,1% Saigon Petro 831 5,8% 822 5,6% 834 5,5% 831 5,4% Vinapco 275 1,9% 272 1,8% 247 1,6% 275 1,8% Military Petroleum Corporation 437 3,0% 443 3,0% 450 3,0% 457 3,0% Dong Thap Petroleum Trading Company 530 3,7% 493 3,4% 473 3,1% 518 3,4% Other importers 706 4,9% 720 4,9% 726 4,8% 722 4,7% 14.334 100% 14.707 100% 15.109 100% 15.429 100% Tổng cộng % Vol (ton) % Vol (ton) % Vol (ton) % (Sources: Ministry of Industry & Trade) Page 123 ... lot of experience in the business sector and in the oil and gas construction - Have young dynamic staff group of in- depth training in the field of oil and gas business 2.3.4.2 Weakness - PV OIL. .. sustainable way in the period 201 3-2 017 and vision to 2025 - Implementation of the policy, the policy of the state of the business system, towards markets in the region and the world, proposals to the government... oil and oil products in Vietnam and in the region c) Goals of PV OIL: - Becoming the leading corporations in the country and the Asia Pacific region in the field of import and export business of